Barclays Final Salary pension GMP/Excess revaluation & Anti-franking

edited 15 September 2013 at 6:20PM in Pensions, Annuities & Retirement Planning
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  • MikeFloutierMikeFloutier Forumite
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    Ok, last question for tonight, and this is a very practical common sense one:-

    Bearing in mind that a pension of the order of - entire deferred pension revalued by RPI/5% plus GMP revaluation - would be far more than a simple revalued deferred pension, is it reasonable to expect more than the simple revalued deferred pension?

    My view is that the answer is No, unless there is clear evidence to the contrary, either in the Scheme rules, or in pension law.
  • edited 8 September 2013 at 10:58PM
    SnowManSnowMan Forumite
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    edited 8 September 2013 at 10:58PM
    Ok, last question for tonight, and this is a very practical common sense one:-

    Bearing in mind that a pension of the order of - entire deferred pension revalued by RPI/5% plus GMP revaluation - would be far more than a simple revalued deferred pension, is it reasonable to expect more than the simple revalued deferred pension?

    My view is that the answer is No, unless there is clear evidence to the contrary, either in the Scheme rules, or in pension law.

    While I have no legal training at all, I think at a guess that it is not reasonable to expect more if the scheme rules say the whole pension is inflation linked in deferment, as it says in PSA1993 Chapter II 84 (5) here
    5)The fact that a scheme provides for the amount of the pension or other benefit for a member or for any other person in respect of him to be increased during the pre-pension period—

    (a)by the percentages specified during that period under section 151(1) of the [1992 c. 5.] Social Security Administration Act 1992 (directions specifying percentage increases for up-rating purposes); or

    (b)under any arrangement which, in the opinion of the Board, maintains the value of the pension or other benefit by reference to the rise in the general level of prices in Great Britain during that period,

    does not in itself result in conflict with this section, if the increase falls to be determined by reference to an amount from which the guaranteed minimum for a member or a member’s widow or widower has not been deducted.
    b) is talking about revaluation of the whole pension and the section with which it doesn't conflict is this section saying you have to statutorily revalue the excess i.e. it is an alternative to statutorily revaluing the excess.

    However the scheme still needs to also cover the revalued GMP plus unrevalued excess, because of the separate anti-franking requirement in PSA 1993 paras 87 to 90.
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  • xylophonexylophone Forumite
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    there is danger of dying due to the effect of pension complexity on the brain.

    Losing the will to live, you mean?:rotfl:

    And we still haven't scratched the surface of the inflated pre NRA quotation!

    I really am wondering whether Mike's best bet for information isn't someone in the Barclays Pensioners' Club.........
  • MikeFloutierMikeFloutier Forumite
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    Thanks Guys,

    The BarcPen link is actually to Barclaycard and much of the info on the site is simply links to Barclays services, following one link trail I ended up with TW :)

    However, they do have a Facebook page so I've made a post there asking for pointers.

    Regarding the correct calculation of my pension, it looks like we at least know quite a bit about where to find the law concerning this so we should be able to make sense of TW's pronouncements, when we can finally get them.

    So, moving on in my preparedness, having had a quick look at the DWP advice in SnowMan's post regarding the Barber (male/female equalization law), do you think this will impact my situation?

    I liked the Monty Python joke btw, it certainly feels that way, but we will get there!!
  • edited 9 September 2013 at 11:44AM
    SnowManSnowMan Forumite
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    edited 9 September 2013 at 11:44AM
    So, moving on in my preparedness, having had a quick look at the DWP advice in SnowMan's post regarding the Barber (male/female equalization law), do you think this will impact my situation?

    It could have a small affect on you. There hasn't been a test case to clarify the position, but the government have given the view that GMP should be equalised for males and females for post 17/5/90 accrual (or at least scheme benefits including GMPs should be equalised to take out the affect of differing GMPs). As only 4 of your 21 years are post 17/5/90 then it won't have a massive affect. However a female comparator in your situation would broadly speaking benefit from both GMP and excess revaluation to 60 (because NRA and GMP age are the same) whereas you won't get GMP revaluation from 60 and won't get excess revaluation from 65, if TW do what they say in their email and it isn't challenged.

    However the equalisation suggestion in that DWP equalisation note is silly and impractical (and the industry replies to the consultation have reasonably pointed that out) so it's not going to happen that way. Probably some sort of cost neutral conversion of GMPs into excess may happen to address the problem in the future; but nothing is going to happen soon, the issue has been lingering for decades.

    Had all your service been post 17/5/90 then you would have had a double pronged attack against the TW method, a) that they are wrongly applying the anti-franking legislated test at 65 and b) that they are discriminating against you under the Equality Act in not giving you revalued GMP plus revalued excess from 65. As I say b) is weakened because that can't be used for pre 17/5/90 service.


    As it happens I have a deferred pension payable at 60 (I am male) where the company scheme is paying me at the NRA of 60, the GMP at leaving + revalued excess at 60, and then at 65 they say 'your pension will be further increased in payment at age 65 in respect of the GMP. You will be informed at the time whether an increase has taken place'. So very similar to what appears to be the case with you.

    The difference in my case is that all service is post 17/5/90. So if my scheme tried the apparent 'TW trick' of only testing the revalued GMP at 65 was covered, I could use a full double pronged attack to challenge it, my pension would be about 25% less than that for a female comparator throughout my retirement if the 'TW trick' was used.

    I'm many years off retirement so I am not rushing to clarify what the scheme intend to do in my case, but your outcome will be of more than interest to me.
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  • xylophonexylophone Forumite
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    Mike, are we certain that a female of your exact age and leaving service at exactly the same date with exactly the same GMP and excess would actually receive £15,355 at NRA? ( see post 60)?

    Is it possible to check this with TW/ the TW site for deferred pensioners?
  • edited 9 September 2013 at 1:59PM
    SnowManSnowMan Forumite
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    edited 9 September 2013 at 1:59PM
    xylophone wrote: »
    Mike, are we certain that a female of your exact age and leaving service at exactly the same date with exactly the same GMP and excess would actually receive £15,355 at NRA? ( see post 60)?

    Is it possible to check this with TW/ the TW site for deferred pensioners?

    I would take this as read as NRA = GMP age for females, although that assumes the scheme deferred revaluation is minimum statutory revaluation. I won't try to explain that further. But no harm in asking the question.

    But it is worth saying though that while the female comparator would have the same salary history as Mike, the female GMP at leaving would be slightly higher because it accrues at a slightly higher rate (between 16 and 60) for females than males because the female's working lifetime (post 6/4/78) of 35 years is shorter by 5 years than Mike's of 40 years. So the female comparator will have a slightly higher GMP at leaving (=40/35 x male GMP) and slightly lower excess and the same deferred pension at leaving. To illustrate the principle of revaluation I ignored that in my earlier post (lack of revaluation being the main affect) but it should really be taken into account.
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  • MikeFloutierMikeFloutier Forumite
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    Thanks again Guys,

    1. Thanks for making this clear SnowMan. Clearly I need to make sure that TW include equalization before accepting their quote BUT I'll not mention it at this stage as it will only confuse the main issue.

    2. Interesting that your company SnowMan is taking a similar line, and very interesting they are using similar wording, "you will be informed...if...". So we just have to trust them do we???( shake of head)

    3. Unfortunately Xylophone the only variable I am allowed to insert in the TW pension illustration app is "retirement date". It gets the other variables from my staff records. Pity, that would be fun.
  • xylophonexylophone Forumite
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    3. Unfortunately Xylophone the only variable I am allowed to insert in the TW pension illustration app is "retirement date".

    Spoilsports!!:rotfl:
  • edited 10 September 2013 at 8:47AM
    SnowManSnowMan Forumite
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    edited 10 September 2013 at 8:47AM
    Thanks for making this clear SnowMan. Clearly I need to make sure that TW include equalization before accepting their quote BUT I'll not mention it at this stage as it will only confuse the main issue.

    In reality virtually no scheme (except those in wind up) will try to equalise for GMPs until it is clear what is required, and there won't be any indication given by the government of what is required until at the earliest Spring 2014.

    So if you brought up GMP equalisation in practice the scheme would accept that there was a potential issue, but say they aren't going to adjust now, but will adjust benefits if required retrospectively when the required adjustment if any is clear. You couldn't blame the scheme for taking that view.


    However the anti-franking issue does need resolving now and that is where The Pensions Advisory Service (TPAS) looks the only option to clarify matters, unless the scheme start to accept they should be paying under the NRA option from age 65 the revalued GMP plus the revalued excess to 60. Has the question been asked to the scheme 'shouldn't you be paying from 65 at least revalued GMP plus revalued excess under the revaluation and anti-franking legislation, if I take the NRA 60 option?'

    Ultimately there is an option to go to the Pensions Ombudsman but you will need to do that through TPAS again.
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